However, as the war escalated, on the 1st of March 1917, America began taking the threat of underwater warfare seriously enough to purchase the Danish Virgin Islands for $25 million. This was to preempt a possible German purchase for the purpose of installing a naval base there.
The decision of British Honduras (Belize) to send 450 soldiers to fight in the war on the Allied side further increased tensions in the region. In response, a plan was conceived by the exiled Guatemalan General Isidoro Valdez and it proposed to Heinrich Von Eckhart, the senior German diplomat, the general spymaster serving in Mexico City.
The “Valdez Proposal,” as it came to be known, was to muster an army of 5,000 Germans in Mexico, provoke a coup d’état in Guatemala to oust its pro-American president, Manuel Estrada Cabrera. The plan included an invasion of Belize with an army of Honduran opposition liberals to establish a U-boat base. Once a pro-German government had been installed in Honduras as well as in its major ports, then tire Mosquito Coast could also be used for naval bases.
Upon learning of these plans, U.S. naval intelligence sent the esteemed Harvard-educated Mayanologist Sylvanus Morley to Belize on a United Fruit Company ship. He travelled on the pretext of conducting archaeological research in the area.
Working as a secret agent from his headquarters in the American legation compound in Tegucigalpa, he would spend the next 20 months putting together an espionage ring in Belize, Guatemala, and Honduras to spy on and compile blacklists of German-owned businesses and diplomats. Ironically, his agents in Honduras had to collect their monthly pay of $25 from the German-owned Banco de Honduras, the only bank in Tegucigalpa.
Honduras also closed all of Germany’s consulates.
Morley would also travel over 2,000 miles of Central American coastline, including the Bay Islands of Honduras, looking for clandestine U-boat sanctuaries.
During his time in Central America, Morley and his agents would send back over 10,000 pages of information and reports to naval intelligence. Morley would later be acknowledged as probably America’s most effective secret agent during the war. He would later excavate and largely catalog the objects in the great Mayan city of Chichén Itzá in the Yucatán, as well as make several exciting discoveries of other previously lost Mayan temples and pyramids. Morley has been put forward as a model for Steven Spielberg’s fictional movie hero Indiana Jones.
In May of 1917, reports that a Standard Fruit banana boat had been shelled and sunk by a German gunboat on the milk run between La Ceiba and New Orleans prompted Honduras’s pro-American president, Francisco Bertrand, to cut off diplomatic relations with Germany. Honduras also closed all of Germany’s consulates including those in Puerto Cortez, La Ceiba, and Trujillo, and expelled its German diplomats. Honduras was put under martial law, and people wishing to travel within the country’s borders had to do so using an internal passport.
Germany had indeed been using its consulates to coordinate espionage networks. Most of these German agents were corrupt and much more interested in lucrative smuggling activities with allied ships than in espionage or actual sabotage.
Honduras finally entered World War 1 on the side of the allies on July 18, 1918. It was the last nation in the world to declare war on Germany. The threat of U-boats to the banana companies was now over.